The 100-euro trick, and how to pull it off

The Stockmann department store was caught for selling food after its sell-by date, but succeeded in polishing up its tarnished image

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By Pauliina Pulkkinen
     
      "When Iltalehti ran a story at the end of July on that cheese business - and by the way it was an old story, too - I saw red. We'd managed to lose control of our public image. I took the line that we had to do something bold to get it back", says Hannu Penttilä, CEO of the Stockmann department store chain.
      Penttilä talks about the cheese, and about the meatballs, the steak tartare, and the venison and lamb joints that the store's food-courts sold after they had passed their "Best Before" date.
      Much to the store's discomfort, the matters did not remain between the disgruntled customer and Stockmann, but went public, generating a minor food crisis and casting a shadow over the good name of the country's top up-market chain.
     
It is not Stockmann's way to respond to such matters by calling in the fire brigade in the form of spin professionals and image-building advertising wizards, but rather the company prefers to find its own way out of the mire.
      "We sat down together to work something out, but in the end it was probably me who came up with the idea", says Penttilä, speaking of the 100-euro trick.
     
Within a matter of a day or so, Stockmann had placed prominent announcements in several newspapers, promising that any customer who found an item from the food-shelves that was past its sell-by date would receive a hundred euros for their pains.
      At the time of writing this article, Stockmann has handed out around forty 100-euro notes to sharp-eyed customers.
      Penttilä says that sales through the department store's food-courts have not suffered as a result of the earlier bad publicity.
     
In other words, the Stockmann food crisis cost the company EUR 4,000 or thereabouts in cash, plus the costs of advertisements placed in the main newspapers in those cities where the store has an outlet.
      According to Jouni Heinonen, the CEO of Pohjoisranta, a consultancy firm that specialises in image and reputation management, Stockmann dug itself out from the crisis splendidly and at minimal cost. But there is a reason for this, he says.
     
"When a company enjoys a very strong reputation, it is a big advantage in unfortunate cases like this. Already when the first stories about Stockmann started coming out in the press, you could see that people were much more disposed to forgive a player with a good name than one with a bad reputation."
      Stockmann's name as a quality store and a reliable retailer has been shaped over the decades.
      The company has accumulated a stack of reputational capital along the way.
      "It has done things in the right manner and has given the customer compensation, and value. That is the sort of reputation Stockmann has", says Heinonen.
     
A good name in turn obliges its owner to do that little bit better.
      "When a company or store has a good name, clients also expect to be able to hold it to higher standards of quality than the norm in all its actions. That is the constant challenge of making good on your promises", Heinonen goes on.
      It sometimes demands exceptional methods.
     
In the view of Taisto Lehikoinen, the CEO of another image consultancy firm, Mediatum, the key thing was that Stockmann went directly to the customers, on the personal level.
      In consultant-speak, the discovery of the glitch, in this case an item that was past its sell-by date, was a "negative incentive" for the customer, who took out his annoyance by channeling it outside the company and into the public domain.
      "Stockmann cleverly turned around the customer's pique and made it a positive through the 100-euro windfall", argues Lehikoinen.
      He sees the release of the customer's pent-up annoyance as particularly important for a firm that is already skating on thin ice as far as its reputation goes.
      "The more clear and concrete is the message of acknowledging negative things and the more powerful the message of wishing to provide compensation, the sooner the situation can be relieved and the frustrations dissolved", says Lehikoinen.
     
So Stockmann served up a textbook case-study of how to make customer frustrations go away.
      A rather contrasting example, in the view of both Heinonen and Lehikoinen, is that of Sampo Bank.
      The merging of the bank's data systems with those of the Danish parent bank earlier this year could hardly have gone more pear-shaped.
      Unfortunately, the experts believe the same description could be applied to the way the matters were explained to the bank's customers and the public.
     
According to Heinonen, the crucial error was that Sampo Bank forgot the customer almost entirely.
      "The general message or impression left was that there was no real interest in the travails of the customers who were having problems with their online banking or their cards. A certain snootiness, the lack of vision of the bank's management, and a willingness to shift the responsibility elsewhere were all in evidence. The whole time, Sampo Bank was as it were on the defensive, and did not put itself into the shoes of the individual customer being inconvenienced. To cap it all, the measures they took to repair the glitches always came too late", charges Heinonen.
     
Sampo Bank recently reported that it had lost something like 30,000 customers in the wake of the spring's problems.
      Taisto Lehikoinen believes that going public with news of lost clients in this fashion is the first step in a new and better direction.
      "Now they should restore the personal confidence of bank customers, and this will only happen by putting all their sales staff, contact centers, and customer services machinery into the field. Publicity stunts are not going to help, but personal contacts may", says Lehikoinen.
     
But let us return to Case Stockmann. Could the 100-euro trick have gone horribly wrong and worked against itself, leaving the store in an even deeper hole?
      Hannu Penttilä admits that the possibility of everything going off the rails had been considered inside Stockmann.
      "Some were concerned that we would get set up by people acting fraudulently, or that there would be a huge and very public flood of customers finding stuff past its sell-by date. All the same, we wanted to get our message out and get it through."
      The message went through. Undoubtedly, Case Stockmann and the ageing meatballs will be presented as a model of how to do it in many future reputation management and damage limitation seminars.
     
Helsingin Sanomat / First published in print 17.8.2008
     
     

More on this subject:
 FACTFILE: It all started with meatballs...

Previously in HS International Edition:
  Continuing problems at Sampo Bank leaving personnel exhausted (6.8.2008)

Links:
  Stockmann Group

PAULIINA PULKKINEN / Helsingin Sanomat
pauliina.pulkkinen@hs.fi